An 11-year-old boy, severely affected with polyostotic fibrous dysplasia, showed radiographically rapid expansion of a cystic lesion in his right humerus. At biopsy, there was an extraordinarily thin shell of bone and a cavity encapsulated by a hypertrophic fibrous membrane and filled with yellow serous fluid. Histologically, in addition to typical features of fibrous dysplasia, the fibrous capsule membrane was composed of proliferated mesenchymal cells characteristic of the affected bone. Ultrastructurally, many secretory granules were observed in numerous cytoplasmic vacuoles in the capsular cells as well as in the cultured cells isolated from the evacuated fluid.